Whether physically or electronically, the lifeblood of any business is the merchandise it offers in exchange or sells to make a profit. This product offered by the company is usually referred to in the world of business as Stock. However, it is common to refer to the same product -or another version of it- as inventory. So at what point does the merchandise move from one end to the other – what are the differences?
|Comprises of products available for sale, whether the finished product or raw materials||Compromises of raw materials, production materials, finished products, and repair/maintenance tools|
|It is updated daily or more frequently.||Updated on a quarterly/yearly basis at the end of the accounting period|
|Value depends on different methods (e.g., weighted average cost) and directly affects the value of Stock.||Value depends on market value or customer price.|
Stock is the merchandise or products of a business that is usually kept on the business’s premises and is readily available for distribution to customers.
Inventory is the sum of items, components, and raw materials that a business uses to manufacture the final product that is sold to the customer. For example, the inventory of a coffee shop would include items like coffee beans, different types of milk, sugar, mugs, and even the amount of coffee up for sale.
Stock VS Inventory
Here is a summary of the confusion between Stock and inventory: all Stock is inventory, but not all inventory is Stock. The differences arise when merchandise starts moving through the supply chain. The items used for the maintenance of the business are also forms of inventory. For example, raw materials can be considered stock if they are sold directly to the customer, but inventory, when refined, at this point, they are known as inventory. However, when there is a finished product, it is both inventory and Stock – but more appropriately, stock.